6 Big Surprises for First Time Landlords
Becoming a landlord is an exciting time.
You get to buy the perfect piece of rental property in your area, place long-term, high paying tenants in it within days, and start raking in the cash.
Although this is ideally what every property owner wishes would happen upon venturing into the rental property business, this is far from the truth.
In fact, your ideas of getting paid each month, covering your mortgage, and having some left over to pad your bank account can be washed away with one big surprise.
If you are curious about what some of the biggest surprises you can expect to see as a first time landlord are, keep reading.
Being prepared beforehand, and learning from others’ past mistakes, is a great way to keep these surprises at bay, and of course, come closer to success.
Top First Time Landlord Surprises
1. Getting a Great Income Property is Not Easy
As a first time landlord, it is easy to get tripped up on the idea of buying the “perfect” rental property.
However, the truth is, perfect rental properties rarely go up for sale, especially during peak market times. That’s because other property owners hold on to rentals they have worked to upgrade, improve, and build upon – it’s how they make their money.
The best way to become a good landlord is to buy a decent property with room to improve.
Then, make your own upgrades and improvements, and build upon that property as others before you have done.
2. Tenants Don’t Always Tell the Truth on Their Applications
Tenants know that they have to be the very best versions of themselves to be approved for their desired rental property.
And, if they are not making a lot of money, have prior evictions, or have any type of criminal background, chances are they are going to lie to you about it, if given the chance.
In addition, some tenants may stretch the truth when they try to explain why rent is late, why the door is broken, why they have roommates, why they are breaking the lease, or how clean they left the place upon move out.
Do not be surprised by any of this.
3. Maintenance is Tougher Than You Think
Some maintenance and repair jobs can be taken care of easily by you.
Even if you are experienced in fixing things, do not let fear of the cost of outsourcing maintenance jobs cost you all the time and effort you have to put into maintaining your rental property alone.
You will be surprised how many times a tenant will need you.
You will be even more surprised at how minor some of the things they ask for are.
Worse, you may even be surprised at how major some of their requests are, and how many of those requests end up needing a professional.
Balance is the key to being a landlord, and sometimes asking for help is okay.
4. Budgets Are Easily Ruined
One of the most surprising things first time landlords will learn in the beginning stages of their career as a property owner, is that all it takes to disintegrate their rock solid budget plan is one major repair expense.
You think $200 a month in repairs is enough to last the year?
You will be regretting that decision when your property’s A/C unit goes out, and a $4000 replacement is put in.
Always budget for more than you think you will need.
And, always have an emergency fund for major repair issues.
This step to becoming a successful property owner may not stop the sticker shock, but it will lessen the surprise blow it has on your annual budget.
5. If it Isn’t in the Lease Agreement, It Doesn’t Exist
Making sure you have a detailed lease agreement in writing, which is also legally compliant, is sometimes surprisingly difficult.
You want to make sure you address all of the basic contract provisions, but also include specifics like pet policies, rent collection procedures, and other miscellaneous things that pertain just to your rental.
Think about it this way: if you don’t include in the written lease that your tenants must have renters insurance prior to move-in, and you assume they will just have it because it is the responsible thing to do, don’t be surprised that your homeowners insurance has to cover your tenant’s personal belongings in the case of a fire.
Even if the fire was the tenant’s fault.
And don’t forget all of the landlord-tenant laws you must be up-to-date on at all times.
You will surely be surprised at how many different variations of the same law there are, depending on the location of your rental property.
6. How Nice a Property Management Company Can Make Things
Many self-managing landlords will tell you that taking care of your own rental properties is doable, and that you shouldn’t pay someone your hard-earned cash to do it for you.
However, if you do your research and find an experienced property management team, complete with low monthly management fees, you will be surprised to find out how much they take off your plate.
Vacancy advertisements, tenant screening and placement, lease drafting, routine inspections, eviction proceedings, rent collection, 24-hour maintenance and repair calls − the list of what the property management company can do for you goes on and on.
If you are looking to start your own rental property business and invest in your first rental property, do not be taken aback by how much time, effort, and money will have to go into building a solid portfolio and positive cash flow, especially in the beginning.
However, do let yourself be surprised at how much less stress you feel when you employ a top-rated property manager to help you with each step of renting out your income property.